Having a culture of candour is a new goal for many businesses. When a business is open about its operations, it can earn a level of trust that it would not have established otherwise. And in time of crisis, trust is usually a paramount thing to ensure loyalty and effectiveness of business operations in both the workplace and workforce. In the end, a culture of candour helps win shareholders, employees, and general public loyalty.
Buffer, one of the most successful software application companies, created a deck describing values that make up its culture. Among the list is Default to Transparency – a culture to demonstrate Buffer’s commitment to transparency by revealing salaries of employees throughout the organisation. Buffer revealed the pay of each employee by name, from co-founder and CEO to engineers, content crafters, and happiness heroes. Buffer also shared the formula it uses to come up with employee salaries.
Once the employees know that factors like seniority and experience determine pay, they are more likely to understand when other employees earn a higher salary than they do. Consequently, healthy competition is built in their work culture. Pay transparency also helps lessen workplace dramas and politics.
Zappos, an American online shoe and clothing retailer, has its own Zappos Family Core Values. One of their values is building an open and honest relationship with communication. Future employees, clients, and even outsiders can have a tour of the Zappos headquarters and attend a live training event. Attendees can even schedule Q&A sessions with specific departments within Zappos, including customer service, user experience, and marketing.
Zappos’s transparency commitment is visible from the employees and leaders. However, one of the best inspirations might be from Zappos’s CEO Tony Hsieh, as can be seen in his book titled Delivering Happiness. Hsieh explained his decision to open up access to information to company’s vendors which helps the vendors gain complete visibility into their business.
Transparency can take in many forms, from communication of a company’s operation to a business unit to revealing secret culture that helps a business prosper. A culture of candour is about helping not only employees but other stakeholders feel emotionally safe whenever a sudden change and adjustment happens – just like how it is today in the Covid-19 crisis.
Transparency builds trust. Research showed that transparent operations improve perceptions and that communicators perceived to have good intentions are more likely to be trusted, even if their decisions turn out to be wrong. For example, giving people a behind-the-scenes view of a company’s different options gives employees, clients, and investors a sense of belongings. The sense of belongings will eventually boost trust and loyalty among stakeholders.
Many believe that being a good and effective leader means being open and authentic. While transparency is needed to build a successful career and/or business, there is a limitation to how open you should be as a leader. Excessive candour is not necessary for authentic leadership and can even backfire.
HBR in their article Authenticity Paradox gives a perfect example of how frank a leader should be. It describes that when a leader is unsure about a decision, they might lose dignity from their people. For example, a person entering a leadership role was forthright in telling her subordinates that she was nervous about the transitions. As a result, she lost credibility from her staff, who expected a confident leader. The lesson here is that maintaining a little distance from employees can give even authentic leaders the ability to gain employee’s trust.
Same as leadership, giving out all information to gain people’s loyalty and trust might sometimes backfire. Jim Collins advised that there might be good reasons why good leaders must have an optimistic bias when they want to build a culture of candour. For instance, being candour allows leaders to publicly communicate how a business is doing or how it operates. But during a crisis, candour behaviour might backfire if leaders openly said their business might collapse and there might be mass layoffs.
Although some negative effects might not be able to be prevented, such as Covid-19 crisis that forced leaders to do mass layoffs or cut their operational budget, optimistic bias helps lessen crisis perils. First, optimistic bias prevents chaos from happening within the corporate whenever a crisis happens. Second, it can help prevent negative reactions which might affect employee morale and motivation. This means that optimistic bias can be used when transparency is not effective and might create turmoil.
Leaders must be aware, however, while optimistic bias increases a belief that good things will happen, it might lead to poor decision-making due to ignoring risks. Therefore, great leaders know when to use this bias and keep their focus on solutions to problems, without ignoring risks that might occur.